Summary: OVERPRICED
Score: 6/20
MOS: 0%
Share Price: $212
Sticker Price: $11
Is Workday stock a good buy?
Workday is an American on‑demand (cloud-based) financial management and human capital management software company founded in 2005 and based out of Pleasanton CA.
The company was founded by David Duffield, founder and former CEO of ERP company PeopleSoft, and former PeopleSoft chief strategist Aneel Bhusri following Oracle’s hostile takeover of PeopleSoft in 2005.
In 2020, Fortune magazine ranked Workday at #5 on their list of the Top 100 Companies to Work for based on an employee survey of satisfaction. San Francisco Business Times ranked Workday at #2 on their Best Places to Work in the Bay in the largest companies category.
Yesterday Investors Business Daily classified Workday as a BUY because the EPS has increased by 62% and the revenue grew by 18%.
I’m going to have to push back on that BUY rating and here is why.
- Although the EPS is growing, as of Q3 2020 the EPS is still negative at -.10
- The Net Income for Q3 is -$24M
- The debt is over $1B
- The liabilities are over $4.7B
- The Free Cash is -$170M
Also, let’s stack Workday against the competition:
PCTY (Paylocity)
Summary: ON SALE
Score: 13/20
MOS: 99%
Share Price: $193
Sticker Price: $3,000+
PAYC (Paycom)
Summary: ON SALE
Score: 15/20
MOS: 98%
Share Price: $400
Sticker Price: $3,000+
CDAY (Ceridian)
Summary: OVERPRICED
Score: 7/20
MOS: 0%
Share Price: $94
Sticker Price: $24
PAYX (Paychex)
Summary: OVERPRICED
Score: 6/20
MOS: 0%
Share Price: $93
Sticker Price: $58
I love enterprise SaaS but that doesn’t mean all enterprise SaaS companies are good investments. Sure, Workday is well liked by its employees and the public but that doesn’t make it a safe buy. One poor quarterly or annual report could cause this stock to nose dive. It’s also important to note that it has two VERY STRONG competitors including a favorite of mine, Paylocity, as wells as Paycom.
With a score of 6/20, the financials are just too week. With a MOS of 0% (Share Price of $212 vs Sticker Price of $11) this stock could be on a sharp downward slide if the market turns. Be careful if you own this stock.
—
The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.